Canada’s Industry Minister, Francois-Philippe Champagne announced Tuesday that the country has increased its planned support to carmaker Stellantis NV (NYSE:STLA) in an effort to end a stalemate between the two entities and continue construction on a battery plant in Windsor, Ontario.
The automaker halted construction Monday due to a disagreement with the federal government regarding subsidies.
To break the "stalemate," it is important that Ontario "pay its fair share," Champagne told reporters at a news conference in Seoul.
According to Champagne, tensions arose when the United States passed the Inflation Reduction Act (IRA) in August, a comprehensive set of clean-tech incentives for companies. This came after Stellantis and LGES had announced their battery plant investment in March the previous year.
"The company asked us to come back to the table," Champagne said. "In the spirit of fairness ... we said we would level the playing field with the United States, that we would offer them a fair deal quite similar to what we have offered to Volkswagen (ETR:VOWG_p)."
Stellantis confirmed that an increase in support was negotiated after the IRA was adopted, and it is that deal that Canada has yet to deliver on, Stellantis spokesperson LouAnn Gosselin said.
Canada is offering Stellantis manufacturing tax credits now, Champagne said, adding, "There's going to be a lot of economic benefits to the people in Ontario, and that's why we think it's only fair...that the province will pay their fair share."
Ontario Premier Doug Ford, speaking on Monday, said the federal government must put up the new funds, not the province. His office declined to comment on Tuesday.
Champagne said he would likely meet LGES management at an official dinner during his visit to South Korea this week. He said that he was “confident” that the matter would be resolved. Additionally, Prime Minister Justin Trudeau is scheduled to make an official visit to South Korea this week before proceeding to the G7 summit in Japan.
Shares of STLA are down 1.30% in mid-day trading on Tuesday.